1. A company purchased land for $70,000 cash. Real estate brokers commission was $5,000 and a $7,000 cash payment was received for selling an old building on the land before construction of a new building could start. Under the cost principle, the cost of land would be recorded at a. $68,000 b. $70,000 C. $75,000 d. $82,000 Which one of the following items is not considered part of the cost of a truck purchased for business use? 2. a. b. c. d. Sales tax Insurance premium for six months. Substitution of heavy duty shock absorbers for standard ones Cost of lettering on side of truck Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets? 3. a. Salvage value b. Estimated useful life c. Replacement cost d. Cost A company purchased factory equipment on April 1, 2006 for $48,000. It is estimated that the equipment will have a salvage value of $6,000 at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as (partial year) depreciation expense at December 31, 2006 is 4. ,800 b. $4,200 c. $3,000 d. $3,150 A company purchased office equipment for $20,000 and estimated a salvage value of $4,000 at the end of its 10-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used is 5. a. b. c. d. 20% 25% 40% 4% 6. The units of activity method of depreciation produces a. b. c. d. a decreasing depreciation expense each period. an erratic depreciation expense each year a constant, declining percentage rate each period a constant amount of depreciation expense each period